Goldman Sachs: S&P 500 Set to Surge to 8,000 Points as Stock Demand Continues to Overwhelm Supply

August 10th - John Flood, a partner at Goldman Sachs and Head of US Stock Execution Services, stated that despite the expected record-high US equity issuance in 2026, stock demand will continue to outpace supply, with the S&P 500 Index poised to further rise to 8000 points. The S&P 500 closed at a record high of 7757 points last Friday, marking the 26th record high this year.

Goldman Sachs projects that the total US equity issuance in 2026 will reach around $700 billion, with IPO issuance slightly exceeding $225 billion and other issuance around $450 billion. Despite the record size, this is only about 1% of the Russell 3000 Index market cap, roughly in line with the historical average from 2015 to 2019. The current issuance size is more in line with market normalization rather than excessive exuberance.

Meanwhile, stock buybacks remain a significant force supporting market demand. US corporate buyback authorizations have reached $989 billion year-to-date, hitting a record high. Goldman Sachs expects full-year 2026 public market stock buybacks to reach $1.4 trillion, significantly higher than the around $700 billion in primary market issuance. Even considering the potential additional supply from IPO lock-up expirations, demand is expected to exceed supply.

The current growth in equity issuance is mainly driven by AI investment demand, with AI-related issuance accounting for about 40% of the US follow-on issuance volume. With large-scale tech companies expected to spend over $1 trillion annually on capital expenditures in the coming years, other firms may also seek financing to support their AI investment plans. However, Goldman Sachs anticipates that external financing for these large-scale tech companies will still be predominantly debt-based, with equity financing playing a more supplementary role.